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Trade

Indonesia and Canada to launch economic partnership talks

Widodo government on mission to 'create export opportunities' amid pandemic

Indonesia aims to reach an economic partnership deal with Canada, building its trade presence in the Americas. (Source photos by AP and Reuters)

JAKARTA -- Indonesia and Canada will begin negotiations on a comprehensive economic partnership agreement, both countries said on Monday, as the Southeast Asian nation steps up its economic diplomacy under President Joko Widodo.

In a joint statement, they agreed to open talks covering areas including "market access, rules to facilitate trade and investment, and cooperation, taking into account each other's sensitivities and different levels of development." The first round will be held "at the earliest opportunity," they added.

Canada was Indonesia's 19th-largest trading partner in 2019, according to data from the World Bank, with $2.6 billion worth of trade passing between the two countries.

Indonesia's Ministry of Trade said Monday's move represents "a strategic effort to open up opportunities for greater penetration of Indonesian products in North America, considering that Indonesia currently only has one trade agreement in the Americas," with Chile.

Meanwhile, Canada was the No. 15 investor in Indonesia in 2020, contributing $175.3 million across 255 projects.

The deal comes as Widodo pushes for a buildup of Indonesia's economic ties. The president has instructed the country's ambassadors to actively promote such relationships. The deal with Chile was struck in 2017, while in 2019, Indonesia agreed to comprehensive EPAs with both Australia and South Korea.

"This step is a follow-up to President Joko Widodo's directive, so that Indonesia actively forms international trade negotiations with potential trading partners," said Muhammad Lutfi, the country's trade minister. He said Jakarta wants to "open up new market opportunities, especially to create export opportunities in the midst of a pandemic."

Trade ministry officials told local media earlier in the year that Indonesia would look to finalize negotiations and reviews on 11 international trade agreements by the end of 2021.

That includes the high-profile comprehensive EPA with the European Union, on which the parties have been unable to conclude negotiations despite five years of talks.

Palm oil has been a huge sticking point, with tensions simmering in the background ever since the EU decided in 2018 to phase out the use of palm oil-based biofuels over deforestation concerns.

The coronavirus pandemic has also hampered progress, with the last round of negotiations coming in December 2019.

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